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Liberty Street Economics
Mortgage Rate Lock-In and Homeowners’ Moving Plans
After falling to record lows during the pandemic, the average U.S. 30-year mortgage rate rapidly increased in 2022 and 2023 and now hovers near a two-decade high of 7.2 percent. For those that locked in a low mortgage rate prior to 2022, this significantly increased the cost of moving, potentially reducing geographic mobility and turnover in the housing market. The authors utilize SCE Housing Surveys to estimate the extent to which mortgage rate lock-ins are suppressing homeowners’ moving plans.
By Felix Aidala, Andrew Haughwout, Ben Hyman, Jason Somerville, and Wilbert van der Klaauw
The Survey of Consumer Expectations: A Look Back at the Past Decade
It has been a little over ten years since the Federal Reserve Bank of New York began releasing its Survey of Consumer Expectations (SCE). Over the past decade, SCE data have yielded insights on a host of topics and have been cited in more than 170 academic research papers. The authors review some of the headline findings from the survey’s history, highlighting the evolution of consumers’ expectations about inflation and labor market outcomes.
By Olivier Armantier, Gizem Koşar, Giorgio Topa, and Wilbert van der Klaauw
The Anatomy of Export Controls
Governments increasingly use export controls to limit the spread of domestic cutting-edge technologies to other countries. However, little is known about the effect of export controls on supply chains and the productive sector at large. Do they induce a selective decoupling of the targeted goods and sectors? How do global customer-supplier relations react to export controls? The authors analyze the supply chain reconfiguration and associated effects following the imposition of export controls by the U.S. government.
By Matteo Crosignani, Lina Han, Marco Macchiavelli, and André F. Silva
Monetary Policy and Money Market Funds in Europe
The yields of U.S. money market fund (MMF) shares respond to changes in monetary policy rates much more than the rates of bank deposits. Consistent with this, the size of the U.S. MMF industry fluctuates over the interest rate cycle, expanding during times of monetary policy tightening. The authors show that the relationship between the policy rates of the European Central Bank and the size of European MMFs investing in euro-denominated securities is also positive—if policy rates are positive.
By Marco Cipriani, Daniel Fricke, Stefan Greppmair, Gabriele La Spada, and Karol Paludkiewicz
A Retrospective on the Life Insurance Sector after the Failure of Silicon Valley Bank
Following the Silicon Valley Bank collapse, the stock prices of U.S. banks fell amid concerns about the exposure of the banking sector to interest rate risk. The S&P 500 Bank index dropped relative to S&P 500 returns, and the stock prices of insurance companies tumbled as well. Yet, insurance companies’ direct exposure to the three banks that failed during this period was modest. The authors examine the possible factors behind the reaction of insurance investors to the failure of Silicon Valley Bank.
By Fulvia Fringuellotti and Saketh Prazad
Decorative image of a drop of water hitting a pool of water with dollar bills under the water.
Internal Liquidity’s Value in a Financial Crisis
Should U.S. financial firms affiliate themselves with bank-holding companies (BHCs)? This affiliation brings benefits, such as access to liquidity from other affiliated entities, as well as costs, particularly a larger regulatory burden. The authors use confidential data on the population of broker-dealers to study the benefits of being affiliated with a BHC, with a focus on the global financial crisis. They find that the affiliation makes broker-dealers more resilient to aggregate liquidity shocks and more willing to hold riskier securities on their balance sheet.
By Cecilia Caglio and Adam Copeland
RESEARCH EVENT
May 16 Webinar: Demystifying a Career Path in Economics and Advancing Diversity,
Spring 2024
Join us in an online event outlining career paths for students in economics.

Topics will include: tips for success in the field of economics (college and beyond); potential career paths at the New York Fed and in the wider marketplace; the role of RAs and college-level interns in the Bank; and career-planning resources and mentoring information.

REGISTER
Thursday, May 16
4:00-5:30 pm ET
RESEARCH TOPICS
Applied Macroeconomics
and Econometrics Center
The mission of the Applied Macroeconomics and Econometrics Center (AMEC) is to provide intellectual leadership in the central banking community in the fields of macro and applied econometrics.

Data Releases
Global Supply Chain Pressure Index
(Updated: Monthly)

Measuring the Natural Rate of Interest
(Updated: Quarterly)

Multivariate Core Trend Inflation
(Updated: Monthly)

The New York Fed DSGE Model
(Updated: Quarterly)

New York Fed Staff Nowcast
(Updated: Weekly)

Outlook-at-Risk
(Updated: Monthly)

Treasury Term Premia
(Updated: Daily)

Yield Curve as a Leading Indicator
(Updated: Monthly)
Center for Microeconomic Data
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Equitable Growth Indicators (EGIs)   
A measure of disparities across four economic outcomes—inflation, real and nominal earnings, employment, and real and nominal consumer spending.
Corporate Bond Market Distress Index (CMDI)
The CMDI is a summary metric of corporate bond market functioning based on information from multiple sources including measures of primary market issuance and pricing, secondary market pricing and liquidity conditions, and the relative pricing between traded and nontraded bonds. It updates monthly.
Regional Surveys
Monthly surveys conducted by the New York Fed track the sentiment of executives at regional manufacturing and service-sector firms regarding business conditions.

Data Releases
Empire State Manufacturing Survey
(Updated: Monthly)

Business Leaders Survey
(Updated: Monthly)

Supplemental Survey Report
(Updated: Quarterly)
Regional Employment Trends
These interactive charts track employment in state and metro regions in the Federal Reserve’s Second District, utilizing the New York Fed’s early benchmarks of payroll employment data. It updates monthly.
Mapping Home Price Changes
Explore year-over-year changes in home prices since 2003, both regionally and nationally, using this dynamic map — updated with new home price index data on a monthly basis. Hover over a county for granular data.
Early Benchmarked Employment Data
Monthly releases of early benchmarked employment figures for New York State, New Jersey, Puerto Rico, and the U.S. Virgin Islands, as well as the metropolitan areas in New York and Northern New Jersey
The Labor Market for Recent College Graduates
Labor market conditions for recent college graduates cooled somewhat at the end of 2023 but generally remained solid. While the unemployment rate rose to 4.8 percent, the underemployment rate was little changed at 40.3 percent, remaining below its pre-pandemic level.
Recent Publications
Do Mortgage Lenders Respond to Flood Risk?
Using property-level mortgage data, property-level risk data, and country-wide FEMA flood maps, the authors identify the effects of flood risk on mortgage lending. Focusing on properties that face flood risk but are not in a FEMA flood zone, they find that lenders are less willing to originate mortgages and charge higher rates for lower LTV loans for properties that face “un-mapped” flood risk. Their results suggest that lenders are aware of flood risk outside FEMA’s identified flood zones.
Kristian S. Blickle, Evan Perry, and João A. C. Santos, Staff Report 1101, May 2024
The Nonlinear Case Against Leaning Against the Wind
The authors study the benefits and costs of leaning against the wind (LAW)—that is, changing the conduct of monetary policy in response to a build-up of financial vulnerabilities—in a flexible, non-parametric model of the dynamic interactions between monetary policy, financial conditions, and macroeconomic outcomes. They find that downside risk to growth increases in response to a counterfactual tightening of the path of monetary policy, suggesting there is limited evidence to support LAW.
Nina Boyarchenko, Richard K. Crump, Keshav Dogra, Leonardo Elias, and Ignacio Lopez Gaffney, Staff Report 1100, May 2024
Personal Bankruptcy Protection and Household Debt
Using changes in bankruptcy protection laws across the U.S. between 1999 and 2005, the authors revisit the question of how consumer bankruptcy protection has influenced consumer lending markets and household behavior. Among their findings: An increase in protection levels causes borrowers’ unsecured credit holdings, primarily credit card debt, to rise, while their level of secured debt, including mortgage and auto loans, remains largely unchanged; and the additional unsecured borrowing is not associated with increases in delinquency rates.
Felipe Severino, Meta Brown, and Rajashri Chakrabarti, Staff Report 1099, April 2024
Is There Hope for the Expectations Hypothesis?
The expectations hypothesis (EH) of the term structure of interest rates states that yields on government bonds reflect the average short rate expected to prevail over the life of the bond. However, the preeminent role of the EH stands in tension with the overwhelming empirical evidence stacked against it. The authors reevaluate the evidence and find that not only is the EH decisively rejected in the data, but model-implied short-rate expectations generally display, at best, only a weak co-movement with the forward rates of corresponding maturities.
Richard K. Crump, Stefano Eusepi, and Emanuel Moench, Staff Report 1098, April 2024
The Life-Cycle Dynamics of Wealth Mobility
Do rich and poor people remain that way throughout their lives? The authors use twenty-five years of tax records for the Norwegian population to study the mobility of wealth over people’s lifetimes, finding considerable wealth mobility over the life cycle. The authors show parental wealth is the key predictor of who is persistently rich or poor, while human capital is the main predictor of those who rise and fall through the middle of the distribution.
Richard Audoly, Rory McGee, Sergio Ocampo, and Gonzalo Paz-Pardo, Staff Report 1097, April 2024
Geopolitical Risk and Decoupling: Evidence from U.S. Export Controls
Amid the current U.S.-China technological race, the U.S. has imposed export controls to deny China access to strategic technologies. The authors document that these measures prompted a broad-based decoupling of U.S. and Chinese supply chains. As a result of these disruptions, affected suppliers have negative abnormal stock returns, wiping out $130 billion in market capitalization, and experience a drop in bank lending, profitability, and employment.
Matteo Crosignani, Lina Han, Marco Macchiavelli, and André F. Silva, Staff Report 1096, April 2024
Investor Attention to Bank Risk During the Spring 2023 Bank Run
The bank run that started in March 2023 in the U.S. transpired at an unusually rapid pace, suggesting that depositors became aware of bank liquidity risk quite suddenly. The authors examine how investors’ perception of bank balance sheet risk evolved before and during the March-April 2023 bank run. Their findings suggest that investors with limited attention focused on April announcements of additional downgraded banks to update their priors on balance sheet risk, even though the authors found these announcements to be uninformative.
Natalia Fischl-Lanzoni, Martin Hiti, Nathan Kaplan, and Asani Sarkar, Staff Report 1095, April 2024
The Global Credit Cycle
Do global credit conditions affect local credit and business cycles? Using a large cross-section of equity and corporate bond market returns around the world, the authors construct a novel global credit factor and a global risk factor that jointly price the international equity and bond cross-section. They uncover a global credit cycle in risky asset returns and show that the global pricing of corporate credit is a fundamental factor in driving local credit conditions and real outcomes.
Nina Boyarchenko and Leonardo Elias, Staff Report 1094, March 2024
RESEARCH SERIES
Economic Inequality
This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.
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